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6 Aug 2014

Gold held below $1,300 an ounce as U.S. data that beat estimates strengthened the dollar, curbing demand for an alternative investment and countering haven bids from worsening tension between Ukraine and Russia.

Gold for immediate delivery traded at $1,290.22 an ounce at 11:05 a.m. in Singapore from $1,288.78 yesterday, when the metal rose and fell at least 0.4 percent before ending little changed, according to Bloomberg generic pricing. The dollar held near a nine-month high against the euro today.

Bullion ended a 12-year rally in 2013 on speculation the Federal Reserve would end monthly bond-buying used to fuel growth. Reports yesterday showed factory and service gains in the world’s largest economy, signaling that the recovery may be strengthening. Gold rebounded 7.2 percent this year, partly as unrest in Ukraine and the Middle East boosted haven demand.

Gold “is caught between an improving U.S. economy and tension in Ukraine,” said Huang Wei, a Shanghai-based analyst at Huatai Great Wall Futures Co. “We remain cautious as the Fed maintains its path to end asset purchases.”

Fed Bank of Dallas President Richard Fisher said yesterday that fellow policy makers are becoming more hawkish. In June, Fed officials forecast they would raise the federal funds rate above zero sometime next year, without specifying a month.

Poland said yesterday a renewed buildup of Russian troops on Ukraine’s border raises the specter of a possible invasion of its neighbor, as President Vladimir Putin ordered his government to prepare a response to U.S. and European sanctions.

Gold for December delivery advanced 0.5 percent to $1,291.50 an ounce on the Comex in New York. Holdings in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, were unchanged at 800.05 metric tons yesterday.

Silver for immediate delivery rose as much as 0.4 percent to $19.8634 an ounce and traded at $19.8612. Earlier, the metal dropped to $19.74, the lowest level since June 18.

Spot platinum traded at $1,458.50 an ounce from $1,457.44 yesterday, when prices dropped for a second day. Palladium increased 0.3 percent to $848.23 an ounce, halting a four-day losing streak. - Bloomberg

Petroleos de Venezuela SA, the Latin American nation’s state-owned crude producer, said the U.S. oil refining and marketing assets it’s seeking to sell are worth more than $10 billion.

“Their value is much, much more,” Rafael Ramirez, president of the oil producer known as PDVSA, told reporters yesterday. The company is receiving offers for assets of Houston-based Citgo Petroleum Corp., he said, without providing details of the value of the bids received.

PDVSA is seeking to sell Citgo assets, the U.S. unit said in a July 29 bond prospectus document. The company owns three refineries capable of handling about 749,000 barrels a day in Louisiana, Texas and Illinois, and sells gasoline through about 6,000 stations.

“We are not a refining company, we’re an oil producing company,” Ramirez said at an event marking 100 years of Venezuelan oil production in the western Zulia state.

Venezuela President Nicolas Maduro is seeking to sell foreign refineries to boost oil exports to China, raise cash and reduce the risk of having assets seized if it loses international lawsuits brought by former oil partners, GlobalSource Partners’ Ruth de Krivoy and Tamara Herrera said July 31 in an e-mailed report to clients.

“Our situation is not like many analysts have said, claiming that we need fiscal revenues,” Ramirez said. “We are doing well with our fiscal revenues from the oil sector.”

Contract Disputes

Contract disputes and expropriations have been filed at the International Centre for Settlement of Investment Disputes and the International Chamber of Commerce’s Court of Arbitration by mining and oil companies that operated in the country including Exxon Mobil Corp. (XOM), Gold Reserve Inc., Phillips 66 and ConocoPhillips.

“With takeovers of Exxon and ConocoPhillips upgraders, these assets could be potentially taken to satisfy an arbitration ruling against them,”Andy Lipow, president of Houston-based Lipow Oil Associates LLC energy consulting firm, said in a phone interview.

Venezuela is Latin America’s biggest oil exporter, shipping 1.8 million barrels a day in 2013, according to the BP Statistical Review of World Energy.

Maduro has spent revenue from exports on social programs created by predecessor Hugo Chavez and debt repayments, pushing the country’s public sector deficit to 12.3 percent of gross domestic product last year, according to Barclays Plc.

Citgo had sales of $42.3 billion last year and earnings before interest, taxes, depreciation and amortization of $1.8 billion, according to the bond prospectus. - Bloomberg

West Texas Intermediate rose for a second time in three days after an industry report showed crude stockpiles declined in the U.S., the world’s biggest oil user. Brent climbed in London.

Futures advanced as much as 0.4 percent in New York. Crude supplies shrank by 5.5 million barrels last week, the American Petroleum Institute was said to report yesterday. Data from the Energy Information Administration today is projected to show inventories slid by 1.55 million, according to a Bloomberg News survey. Kurdish oil exports remain unaffected by the turmoil in Iraq, producer Genel Energy Plc said.

“There is a possibility that the market is starting to develop a bit of a range around here,” said Ric Spooner, a chief strategist at CMC Markets in Sydney who predicts investors may sell West Texas contracts if prices climb to about $98.70 a barrel. “Iraq looks to be contained for the short term. Markets are prepared to leave the premium at a relative low on a watching brief basis.”

WTI for September delivery rose as much as 34 cents to $97.72 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.62 at 12:15 p.m. Singapore time. The contract dropped 0.9 percent to $97.38 yesterday, the lowest price since Feb. 5. The volume of all futures traded was about 33 percent below the 100-day average.

Brent for September settlement climbed as much as 45 cents, or 0.4 percent, to $105.06 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.36 to WTI. It closed at $7.23 yesterday.

Fuel Supplies

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies fell by 3.6 million barrels during the week ended Aug. 1., the API in Washington said, according to Bain Energy. Inventories were probably unchanged at 218.2 million, the survey shows before the EIA report.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest oil-storage hub in the U.S., increased by 51,000 barrels, the API was said report. The group collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm.

The peak driving season in the U.S. typically starts at the end of May and runs through to Labor Day in September.

Mideast Unrest

Genel Energy, the largest producer in Iraqi Kurdistan, is confident that the region’s independent pipeline exports won’t be impeded by the violence and political turmoil engulfing the country. The regional government has loaded five cargoes in Ceyhan, Turkey, and two have been bought and paid for, Chief Financial Officer Julian Metherell said yesterday.

The conflict has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the Organization of Petroleum Exporting Countries’ second-largest producer, pumping 3 million barrels a day in July.

In Libya, National Oil Corp. is in talks to resume exports from the Es Sider port, according to Mohamed Elharari, a spokesman for the state-run company. Shipments from the Ras Lanuf terminal will start this week, Elharari said yesterday. The facilities were handed over last month by rebels seeking self-rule in the east of the country, the holder of Africa’s biggest crude reserves. - Bloomberg

The dollar approached the strongest in almost nine months versus the euro as signs the U.S. economy is strengthening and tensions over Ukraine are increasing boosted the appeal of American assets.

A gauge of the greenback climbed toward the highest since February after data yesterday showed factory orders and service activity increased and Federal Reserve Bank of Dallas President Richard Fisher said his fellow policy makers were becoming more “hawkish.” Poland said a buildup of Russian troops on the Ukraine border raises the specter of a possible invasion. New Zealand’s dollar slid to a two-month low after job growth slowed more than economists forecast and dairy prices fell.

“A strong batch of U.S. data helped the U.S. dollar’s cause,” said Imre Speizer, a markets strategist based in Auckland at Westpac Banking Corp. “There was also a good dose of risk aversion last night, and that would’ve helped the U.S. dollar as well.”

The dollar gained 0.1 percent to $1.3368 per euro as of 1:13 p.m. in Tokyo after advancing to $1.3358 yesterday, the strongest since Nov. 11. The U.S. currency was little changed at 102.56 yen. The yen appreciated 0.1 percent to 137.11 per euro.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, rose less than 0.1 percent to 1,023.45 after climbing to 1,024.01 yesterday, the highest since Feb. 13.

Recovery Signs

The Institute for Supply Management’s non-manufacturing index expanded in July at the fastest pace since December 2005, the group said yesterday. Factory orders climbed 1.1 percent in June, almost twice as much as predicted in a Bloomberg News survey, after falling a revised 0.6 percent the previous month, the Census Bureau said.

The Federal Open Market Committee “is coming in my direction,” Fisher said in an interview with Fox Business Network yesterday. The Dallas Fed president said he has a “hawkish slant” on monetary policy.

Fisher is trying to help out the dollar “with his usual hawkish comments,” Emma Lawson, a senior currency strategist at National Australia Bank Ltd. in Sydney, wrote today in a client note. “It seems the market may just be swinging around to believe him.”

Traders are willing to pay a premium for one-month options to buy the dollar against all of its 16 major counterparts, 25-delta risk reversals show.

Ukraine Tension

Russian President Vladimir Putin ordered his government to prepare a response to U.S. and European sanctions. He has shown no sign of backing down over Ukraine, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.

The dollar has strengthened 1.7 percent in the past month, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen gained 1.2 percent, while the euro fell 0.2 percent.

The kiwi dropped for a second day after Statistics New Zealand said employment increased 0.4 percent in the second quarter, less than the median estimate of 0.7 percent growth among economists surveyed by Bloomberg.

“Before this report, there was a bias to sell the kiwi dollar,” Westpac’s Speizer said. “This gives the market an excuse to go and do some more.”

The currency also weakened after GlobalDairyTrade said whole milk powder prices tumbled 11.5 percent at auction yesterday to a two-year low. That extended the decline to 46 percent from a peak in February.

The New Zealand dollar declined 0.4 percent to 84.35 U.S. cents after sliding to 84.24 cents, the weakest since June 5. - Bloomberg

5 Aug 2014

West Texas Intermediate crude traded near the highest price in three days before supply data that will signal the strength of fuel demand in the U.S., the world’s biggest oil consumer. Brent in London was steady.

Futures were little changed in New York after snapping a five-day losing streak yesterday. Gasoline stockpiles probably fell for the first time since June last week, according to a Bloomberg News survey before a government report tomorrow. Kurdish fighters in Iraq retook northern border towns seized by militants from Islamic State, a breakaway al-Qaeda group, the Kurdistan Democratic Party said on its website.

“It’s been a good driving season,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone, referring to the summer period of peak fuel demand. “There is quite a sound floor below the price at the moment.”

WTI for September delivery was at $98.38 a barrel in electronic trading on the New York Mercantile Exchange, up 9 cents, at 2:45 p.m. Sydney time. The contract gained 0.4 percent to $98.29 yesterday, the highest close since July 30. The volume of all futures traded was about 39 percent below the 100-day average. Prices are little changed this year.

Brent for September settlement rose 18 cents, or 0.2 percent, to $105.59 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.20 to WTI. It closed at $7.12 yesterday.

Fuel Supplies

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies probably fell by 300,000 barrels to 217.9 million during the week ended Aug. 1, according to the median estimate of nine analysts surveyed by Bloomberg before the Energy Information Administration report. The country’s peak driving season typically runs from the end of May to Labor Day on Sept. 1.

U.S. crude inventories shrank by 1.5 million barrels to 365.9 million, the survey shows. Distillate stockpiles, a category that includes heating oil and diesel, expanded by 700,000 barrels.

The American Petroleum Institute is scheduled to release separate supply data today. The industry-funded group in Washington collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.

Mideast Unrest

Kurdish fighters recaptured Sinjar and Rabia’ah near the Syrian border after heavy fighting yesterday, according to the Kurdistan Democratic Party. At least 50 Islamic State militants were killed as security forces battled to regain the village of Wana, south of Mosul dam.

The conflict has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the Organization of Petroleum Exporting Countries’ second-largest producer, pumping 3 million barrels a day in July.

In Libya, turmoil could have “negative ramifications on a global scale” if the country continues to spiral out of control, Abu Bakr Bueira, a senior lawmaker told the country’s newly elected parliament yesterday. The nation is the smallest OPEC producer and holds Africa’s biggest oil reserves. - Bloomberg

Gold held below $1,300 an ounce as Portugal’s bailout of Banco Espirito Santo SA reduced concern the lender’s crisis may spread and tension in Gaza eased, damping demand for a haven. Silver rose from a six-week low.

Gold for immediate delivery was at $1,288.99 an ounce at 12:16 p.m. in Singapore from $1,288.25 yesterday, according to Bloomberg generic pricing. The metal fell 0.4 percent yesterday as Portugal’s central bank took control of Banco Espirito Santo, helping the Standard & Poor’s 500 Index rebound from the biggest weekly loss in two years. Bullion fell for a third week in the period to Aug. 1, the longest such slump since September.

Data from the Institute for Supply Management may show today that U.S. services expanded to 56.5 in July from 56 in June, supporting the case for the Federal Reserve to raise borrowing costs. Gold tumbled 28 percent last year on expectations for reduced stimulus in the world’s largest economy. Prices rallied 7.3 percent this year partly on tensions in Ukraine and in the Middle East, where Israel and the Palestinians yesterday agreed to a 72-hour truce in Gaza.

“Interest in gold is fading as U.S. economic data continue to show signs of improvement,” Xia Yingying, an analyst at Nanhua Futures Co., said from Hangzhou, China. “Gold is also losing support from geopolitical tensions.”

Gold for December delivery traded at $1,289.70 an ounce on the Comex in New York from $1,288.90 yesterday. Assets in the SPDR Gold Trust, the largest bullion-backed exchange traded-product, fell 0.2 percent to 800.05 metric tons yesterday after being unchanged for six days.

Silver for immediate delivery rose 0.1 percent to $20.1893 an ounce. Prices earlier dropped to $20.1402, the lowest since June 19, sending the metal’s ratio to gold to 64.4204, the highest since June 18.

Gold will extend this year’s surprise rally and climb to the highest price since September on the outlook for accelerating inflation, USAGOLD Centennial Precious Metals Inc. said.

The metal will reach $1,400 an ounce by the end of the year, also supported by higher demand from Asia, Peter Grant, chief market analyst at USAGOLD in Denver said in a telephone interview yesterday. Bullion will climb even if the Federal Reserve increases interest rates, because gains in borrowing costs will probably be accompanied by rising consumer prices, he said.

Gold futures surged 57 percent in the two years through June 30, 2006, as the Federal Reserve raised its benchmark rate to 5.25 percent from 1.25 percent. Interest rates rose as the central bank struggled to contain inflation that accelerated to 4.3 percent, from 3.3 percent. Bullion fell 3 percent in July as the prospect of rising borrowing costs curbed the appeal of the metal as an alternative asset.

“If you look back over time, there are plenty of instances where rates have risen and gold has risen as well,” said Grant, who has tracked the precious metal for 28 years. “Inflation was going up and the Fed was chasing inflation by raising interest rates during that period,” he said, referring to 2004 to 2006.

The metal rallied 7.2 percent this year to $1,288.90 on the Comex in New York partly as violence in Ukraine and the Gaza Strip boosted demand for haven assets. Gold tumbled 28 percent in 2013, the biggest slump in three decades, as signs of accelerating U.S. economic growth raised concern that the Fed’s stimulus would end.

India Imports

The central bank reduced its monthly bond-buying program to $25 billion on July 30, making a sixth consecutive $10 billion cut.

Gold imports by India, the world’s second-largest user, jumped 65 percent in June after the central bank allowed more banks and traders to buy bullion overseas, widening the nation’s trade deficit to an 11-month high.

“I’m primarily looking at the actual physical demand driving prices higher,” Grant said. “I also think inflation is going to pick up a little bit as I anticipate that energy prices are going to rise by year-end as well.”

At the Multi Commodity Exchange, zinc for delivery in August gained 40 paise, or 0.28%, to Rs 143.60 per kg, with a business turnover of 247 lots.

The metal for delivery in September also rose 20 paise, or 0.14%, to Rs 143.85 per kg, with a business turnover of two lots.

Globally, at the London Metal Exchange (LME), zinc for delivery in three months advanced 0.90% to USD 2,359.75 per tonne.

Marketmen said besides a firming trend at domestic spot market, the metal's strength at the LME as stockpiles tracked in London and Shanghai decreased and Goldman Sachs Group projected a global deficit this year, supported the upside in zinc prices at futures trade.

LME inventories for zinc fell 1.9% in July, declining for the fourth straight month. Stockpiles monitored by the Shanghai Futures Exchange dropped 1.3% last week to the lowest level since 2009. - business-standard

After the Federal Reserve maintained its path towards raising U.S. interest rates next year, other major central banks will jostle for space on a crowded stage this week.

The European Central Bank, Bank of Japan, Bank of England and the central banks of India and Australia all hold meetings. While imminent action is unlikely, the time when policy settings start pointing in different directions is nearing.

U.S. growth rebounded in the second quarter and the Fed upgraded its assessment of the economy last week. It is on course to stop creating money in October but the expectation is that there will be no interest rate rise before mid-2015.

That puts the Bank of England in pole position to be the first major central bank to push rates up from their record low 0.5 percent, perhaps before the year is out.

Although the UK economy is expanding at an annualised clip in excess of 3 percent and unemployment is tumbling, the absence of wage pressure means there is no immediate reason to act.

The consensus is that rates will not rise until early 2015 but polling by Reuters last week found economists expect a first voice or two on the nine-strong Monetary Policy Committee to call for a rate rise this week.

The last time the MPC was considering raising rates was in 2006. In May of that year, one MPC member voted for a hike and it took just three months before a majority followed suit.

"We expect the jobless rate will continue to fall rapidly, with the BoE hiking earlier and further than markets project," said Michael Saunders, chief UK economist at Citi.

The voting pattern will only become public when minutes of the meeting are released two weeks hence.

The Fed has just registered its first dissenter, with the hawkish Charles Plosser saying the commitment to keep rates near zero for "a considerable time" did not reflect the gains made by the economy.

Lack of wage inflation has been a common theme in the United States and euro zone as well, though U.S. labour costs recorded their biggest gain in more than 5-1/2 years in the second quarter. That spooked Wall Street last week as it may hasten the Fed's first move.

The European Central Bank, which also meets on Thursday, faces a very different problem to the Bank of England.

Euro zone inflation has slipped further - to just 0.4 percent in July - and if it does not start picking up soon, the pressure to start printing money will grow despite strong reservations within the ECB's Governing Council.

"(The inflation data) don't give any assurance that the euro zone is already out of the deflation danger zone," said Peter Vanden Houte, chief euro zone economist at ING.

"Moreover, with the escalating conflict with Russia dampening growth prospects, it seems unlikely that deflation fears will disappear any time soon."

Having cut all its key interest rates in June and unveiled a new scheme to prime banks with cheap long-term money from September in the hope they will lend it on, the ECB will not act until it has had time to judge the impact of those measures.

If the ECB won't consider more dramatic action until late in the year, it will have a small window of opportunity to act before U.S. rates start heading higher in 2015.

Policymakers admit there is little chance of euro zone long-term interest rates decoupling from U.S. ones if they start rising.

NO CHANGE IN ASIA

The Bank of Japan will deliver its latest policy verdict on Friday, following the sharpest fall in factory output since the devastating earthquake and tsunami of 2011.

With the BOJ already having created money at a furious rate, any policy shift is unlikely. But it may have to temper its assessment that production is "rising moderately as a trend", toning down its upbeat language on the outlook as it becomes less sure about when or even if exports will rebound.

The Reserve Bank of India will leave its key interest rate at 8 percent on Tuesday and won't ease policy until early next year on fears food inflation will spike if monsoon rains are below average, according to a Reuters poll.

Growth is slowing and has stayed below 5 percent in the past two years, well below levels needed to create enough jobs for India's young and expanding workforce.

The Reserve Bank of Australia is also expected to hold rates at 2.5 percent when it meets on Tuesday. Its next move is likely to be up rather than down, but not until next year.

Chinese trade data are due on Friday, kicking off the monthly run of indicators.

Latest survey evidence from the world's number two economy showed factories posted their strongest growth in at least 1-1/2 years in July, adding to evidence that the economy is gaining momentum after a spate of state stimulus measures. - reuters

PT Freeport Indonesia may start exporting copper concentrate on Wednesday after it reached an agreement with the government late last month to resume the exports after a six-month stalemate.

Freeport Indonesia's Chief Executive Rozik Soetjipto said that the local unit of U.S. copper and gold producer Freeport-McMoRan Inc. (FCX) may resume overseas shipments with 10,000 metric tons of the mineral bound for China.

The Indonesian government in January imposed an export ban on unprocessed ores aimed at keeping lucrative refining work within the country. In addition to the ore-export ban, the government in January imposed export duties on mineral concentrates of copper, iron, zinc, and manganese. The duties, which begin at 20%-25%, would rise to 60% before a complete ban on concentrate exports is imposed in 2017.

The government and Freeport Indonesia on July 25 struck a deal allowing the miner to pay lower export taxes as it agreed to build a smelter in Indonesia.

Director General of Coal and Mineral Resources Sukhyar said then that Freeport Indonesia's total copper-concentrate exports are expected to reach 756,300 tons by year-end, with an estimated value of $1.56 billion. - morningstar

Gold traded above a one-month low after three weeks of losses as investors weighed the health of the U.S. economy against the outlook for higher borrowing costs. Silver climbed from the lowest level in six weeks.

Gold for immediate delivery was at $1,292.90 an ounce at 11:31 a.m. in Singapore from $1,293.75 on Aug. 1, according to Bloomberg generic pricing. That day the metal fell to $1,279.30 an ounce, the lowest since June 19, before rebounding to pare the third week of losses that was the longest since September.

U.S. data Aug. 1 showed that while employers added more than 200,000 jobs for a sixth month, the jobless rate rose, damping bets the Federal Reserve will raise interest rates soon after ending monthly bond purchases later this year. That buoyed bullion as the Bloomberg Dollar Spot Index snapped a six-day win streak. Gold also rose on Aug. 1 as global equities fell after Banco Espirito Santo SA, which was taken over by Portugal’s central bank yesterday, was ordered to raise capital and Argentina defaulted.

“Gold had a reprieve as the dollar pulled back after the payrolls data,” said Zhang Lin, an analyst at Yongan Futures Co. in Hangzhou, China. “The U.S. has entered a monetary-tightening cycle and gold will continue to face downward pressure in the mid to longer term.”

Gold for December delivery traded at $1,293.80 an ounce on the Comex in New York from $1,294.80 on Aug. 1, when futures climbed 0.9 percent to trim a third weekly drop. Money managers cut their net-long position 10 percent in the week through July 29, the most since June, U.S. government data show.

Silver for immediate delivery added 0.2 percent to $20.3665 an ounce, after earlier falling to $20.255 an ounce, the lowest price since June 19. The metal retreated 3 percent in July for the biggest monthly loss since March.

Spot platinum lost 0.1 percent to $1,462.88 an ounce after declining in July. Palladium decreased 0.1 percent to $863.85 an ounce after prices capped a sixth month of gains in July for the longest such run since January 2011. - Bloomberg

Hedge funds reduced bets that gold would rally from the longest retreat in a year as U.S. economic growth exceeded analysts’ estimates.

Money managers cut their net-long position by 10 percent in the week through July 29, the most since June, U.S. government data show. Prices dropped for a third week, the longest slide since July 2013. The decline helped to erase almost $610 million from the value of exchange-traded products backed by the metal.

Gold fell 3 percent in July, snapping a 10 percent rally in the first half of the year that outpaced gains for commodities, equities and Treasuries. Even as violence escalated in the Middle East and Eastern Europe, investors sold bullion as signs of quickening American expansion reignited concern that the Federal Reserve will raise borrowing costs. The U.S. grew 4 percent in the second quarter.

“The economic climate has become more moderate in the U.S., and there’s no sign of inflation picking up, so the fear factor that typically drives gold has subsided,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem,Pennsylvania, said Aug. 1. “If we continue to see this reasonable growth rate, I think gold will stay in a narrow range.”

Short Holdings

The net-long position in gold declined to 122,092 futures and options contracts as of July 29, U.S. Commodity Futures Trading Commission data show. Short holdings betting on a drop jumped 24 percent to 26,101, the highest in five weeks.

The U.S. economy expanded after shrinking 2.1 percent in the first three months of 2014, government data showed July 30. Analysts had predicted second-quarter growth of 3 percent. Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, the Labor Department said the next day. Sales of gold coins by the U.S., Mint fell 38 percent to 30,000 ounces last month, the lowest since March.

Bullion tumbled 28 percent last year, the most in three decades, as a stronger U.S. economy and the prospect of less monetary stimulus curbed demand for alternative assets. The Fed reduced its monthly bond-buying program to $25 billion on July 30, making a sixth consecutive $10 billion cut.

Jobs Report

Even as the central bank stayed on pace to end its debt purchases by October, policy makers repeated that they’re likely to keep interest rateslow for a “considerable time” as they look for more improvement in the job market.

Employers added fewer jobs than forecast in July, and the unemployment rate climbed to 6.2 percent from 6.1 percent in June, data showed Aug. 1. Gold futures jumped 0.9 percent that day, the most in a week.

Investors boosted gold holdings through ETPs by 15.7 metric tons in July, the first gain since March and the biggest since November 2012. The appeal of the metal as a haven rose as tensions escalated between Ukraine and Russia. More than 1,500 Palestinians, most of them civilians, have been killed after Israel’s attack on Gaza. More than 60 Israelis have also died, mostly soldiers, since the conflict escalated July 8.

‘Risk Premium’

“Although the risk premium has eased, if we continue to see geopolitical unrest in Europe and the Middle East, that could certainly be a driver for gold,” Brian Hicks, who helps manage about $350 million at U.S. Global Investors in San Antonio, Texas, said July 31.

Combined net-wagers across 18 U.S. traded commodities dropped 9.1 percent to 822,001 contracts as of July 29, the lowest since January, the CFTC data show.

Analysts at Goldman Sachs Group Inc. last week kept their 12-month recommendation for commodities at neutral. Citigroup Inc. said in June that interest is returning to the asset class as Societe Generale SA called raw materials a “really mixed bag” across the sectors.

Bets on higher oil prices slid 0.5 percent to 276,741 contracts last week, the government data show. Copper holdings dropped 12 percent to 38,859. Inventories tracked by the Shanghai Futures Exchange climbed 37 percent in July, the most since February 2012.

Farm Bets

A measure of net-long positions across 11 agricultural products declined 11 percent to 303,637, the smallest since January, the CFTC data show.

Investors cut bullish bets on cotton by 75 percent to the lowest since December 2012. Prices have fallen for 13 straight weeks, the longest slump since at least 1959.

Bullish bets on corn fell for a third straight week to 63,024, the lowest since February. The grain slumped 14 percent in July, the most since September 2011. U.S. production will climb 4.3 percent to a record 14.518 billion bushels, The Linn Group said Aug. 1.

“There is abundant supply of grains, and we just have a lot of corn,” Shonda Warner, the managing partner of Chess Ag Full Harvest Partners in Clarksdale, Mississippi, which oversees about $150 million, said July 31. “The price could drop another 10 to 15 percent. The only thing that could reverse the trend would be a surge in demand, or something that would reduce supply, like a weather event.” - Bloomberg

West Texas Intermediate crude traded near the lowest price in six months before data that will signal the strength of the economy in the U.S., the world’s biggest oil consumer. Brent was steady in London.

Futures were little changed in New York after capping the biggest weekly decline in seven months on Aug. 1. The Markit Economics purchasing managers index for U.S. services is due tomorrow, while factory order data is also scheduled this week. In Iraq, militants took control of two oil fields in the north after clashes, according to the Northern Oil Co.

“There is no fear about supply,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “On technical charts, we saw big drops last week, and both WTI and Brent are down to one of the support levels. WTI is very close to $97.50 a barrel and Brent to $104 a barrel. If those levels hold, the market will rebound.”

WTI for September delivery was at $98 a barrel in electronic trading on the New York Mercantile Exchange, up 12 cents, at 1:15 p.m. Singapore time. The contract slid 0.3 percent to $97.88 on Aug. 1, the lowest close since Feb. 6. The volume of all futures traded was about 1.3 percent above the 100-day average. Prices are down 0.5 percent this year.

Brent for September settlement rose 21 cents, or 0.2 percent, to $105.05 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.08 to WTI. It closed at $6.96 on Aug. 1.

Fuel Demand

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies rose to the highest level in four months as average consumption of the fuel dropped to the lowest since May, even after the country’s peak driving season started with the Memorial Day holiday on May 26.

Markit’s final reading of a gauge for U.S. services is projected to be 60.8 in July, down from 61 in June, according to a Bloomberg News survey. Factory orders probably rose to 0.6 percent in June, a separate survey shows.

Hedge funds and other money managers trimmed their bullish bets on WTI, extending the drop from this year’s peak in June to 22 percent, U.S. Commodity Futures Trading Commission data show. Net-long positions fell 1,375 to 276,741 futures and options combined in the week ended July 29, according to the CFTC.

Mideast Unrest

In Iraq, the Ain Zala and Batma oil fields are under full control of Islamic State, a breakaway al-Qaeda group, according to the state-run Northern Oil Co. Together they have an output of 30,000 barrels per day. The Sunni Islamist militants last month occupied the Qayyara field north of Baghdad.

Fighting has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the second largest producer in the Organization of Petroleum Exporting Countries, pumping 3 million barrels a day in July.

In Libya, Britain dispatched its navy to evacuate its nationals as 22 other people were killed as a result of militia feuds near Tripoli’s international airport. The nation is the holder of Africa’s biggest oil reserves.

West Texas Intermediate oil futures tumbled to a six-month low on Friday, as concerns over U.S. demand for oil and fuel products like gasoline drove prices lower.

On the New York Mercantile Exchange, crude oil for delivery in September fell to a session low of $97.09 a barrel on Friday, the weakest since February 5, before coming off the lows to settle at $97.88, down 0.3%, or 29 cents.

Nymex oil prices were likely to find support at $96.80, the low from February 5 and resistance at $99.85, the high from July 31.

The U.S. Department of Labor said Friday that non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.

The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.

The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

For the week, Nymex oil futures plunged 4.12%, or $4.21, the worst weekly decline since January.

U.S. oil futures lost more than $2-per-barrel on Thursday as bearish inventory data and heavy losses on Wall Street sent oil below the $100-level.

Weekly supply data showed that total motor gasoline inventories in the U.S. increased by 0.4 million barrels last week to 218.2 million, the highest level in four months.

The ongoing buildup in gasoline stocks during the peak summer driving season in the U.S. was seen as bearish for oil prices, amid speculation of slowing demand.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in New York-traded oil futures in the week ending July 29.

Net longs totaled 276,741 contracts as of last week, down 0.49% from net longs of 278,116 in the preceding week.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for September delivery fell to a daily low of $104.39 a barrel on Friday, the weakest level since April 2, before settling at $104.84 by close of trade, down 1.11%, or $1.18.

The September Brent contract lost 3.27%, or $3.55, on the week, as global supplies were seen as ample despite ongoing violence in Iraq, Libya and Eastern Europe.

Meanwhile the spread between the Brent and the WTI crude contracts stood at $6.96 a barrel by close of trade on Friday, compared to $6.30 in the preceding week.

In the week ahead, investors will be focusing on the outcomes of a spate of central bank meetings, with the European Central Bank, the Bank of Japan, the Bank of England and the Reserve Bank of Australia all to hold monetary policy assessments. - investing.com

U.S. natural gas futures lost more than 1% on Friday, as demand for the fuel was likely to remain limited after meteorologists predicted mild summer weather in much of the U.S. through the next few days.

On the New York Mercantile Exchange, natural gas for delivery in September dropped 1.12%, or 4.3 cents, on Friday to settle the week at $3.798 per million British thermal units by close of trade.

Futures were likely to find support at $3.725 per million British thermal units, the low from July 28 and resistance at $3.890, the high from July 31.

Natural gas prices have been under heavy selling pressure in recent sessions after updated weather-forecasting models called for mild summer weather across much of the U.S. over the next several days.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.

Despite Friday’s losses, Nymex natural gas prices tacked on 0.44%, or 1.7 cents, on the week, the first weekly gain in seven weeks.

Natural gas futures rallied almost 1.5% on Thursday after the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 88 billion cubic feet, below expectations for an increase of 93 billion cubic feet.

Total U.S. natural gas storage stood at 2.307 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 21.7% from 23.5% a week earlier and down from a record 54.7% at the end of March.

The EIA's next storage report is slated for release on Thursday, August 7, with analysts expecting a build of 87 billion cubic feet for the week ending August 1.

Inventories rose by 90 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 49 billion cubic feet.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers significantly decreased their bullish bets in natural gas futures in the week ending July 29.

Net longs totaled 16,060 contracts, down 42.1% from net longs of 27,748 in the previous week.

Elsewhere on the Nymex, U.S. crude oil for September delivery settled at $97.88 a barrel by close of trade on Friday, down 4.12%, or $4.21, on the week.

Meanwhile, heating oil for September delivery slumped 1.57% on the week to settle at $2.866 per gallon by close of trade Friday. - investing.com